Belgian companies are in seat for hydrogen boom

The future is green hydrogen. Production takes place via electrolysis, a process in which hydrogen and oxygen, the components of water, are separated. That eats up electricity. But if that happens with renewable energy sources, no CO2 is released. Today 95 percent of all hydrogen is gray hydrogen. The production takes place via steam methane reforming, a chemical process in which the hydrogen is removed from methane and the carbon is released into the atmosphere. So not very environmentally friendly. In addition, there is also blue hydrogen. It is made in the same way as its gray cousin, but it captures and stores the carbon emissions. CO2 emissions are up to 90 percent lower.

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Not competitive

For the time being, green hydrogen is not competitive. But larger factories, standardization and more research should allow the price to fall by 80 percent in ten years. Then green can become cheaper than gray.

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The Hydrogen Council expects the sector to grow at an annual rate of 7 percent until 2050. That would bring global demand for 660 million tons of hydrogen, seven times more than today. The European Commission predicts that by then 470 billion euros will be pumped into European hydrogen projects. That should create 1 million jobs. The Belgian corona recovery plan alone includes more than 400 million euros in investments in the hydrogen economy.

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The possibilities are enormous. Hydrogen can be used to generate energy for industry, for heating, as a fuel for cars and trucks, even for ships and airplanes. Today, 55 percent of the hydrogen goes to the production of ammonia, which is needed for fertilizers. Refineries take a quarter off to break crude oil into gasoline, diesel, kerosene or other derivatives.

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‘Belgium will not play a key role in production due to the lack of renewable energy,’ says Sips. ‘Our country can become a hub in the transport and storage of hydrogen. Moreover, several Belgian companies are playing a pioneering role in the hydrogen race.’

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Hydrogen network

The European Clean Hydrogen Alliance, founded in 2020, has a pipeline of more than 750 hydrogen projects in the EU. Seventy have a link with Belgium. Fluxys Belgium

builds a hydrogen network of more than 100 kilometers to connect the industrial clusters in our country. Fluxys can import hydrogen via the sea via the energy terminal in Zeebrugge. Fluxys is also building a electrolysis plant in Zeebrugge together with Viya Energy. In Ostend, the port, DEME and PMV are doing the same.

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Did you know that Belgium already has the most hydrogen pipelines per square kilometer in the world?

Guy Sips

Analist KBC Securities

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‘Because of its extensive network of pipelines, Belgium can play a role as a transit country to bring hydrogen to all of Western Europe,’ says Sips. ‘The Zeebrugge terminal and the Fluxys network will play an important role in this. By the way, do you know that Belgium already has the most hydrogen pipelines per square kilometer in the world?’

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Zirfon

In addition to Fluxys Belgium, Agfa-Gevaert

best placed among the listed companies to benefit from the hydrogen boom. Analysts see the product Zirfon as a potential goldcrest. Zirphon is an alkaline membrane that is crucial for the separation of the anode and cathode in large-scale electrolysis. ‘Zirfon has a market share of 90 to 95 percent’, says Sips. ‘Moreover, it requires little capital and operational costs. In alkaline membranes, Zirfon is the best product.’

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Sips estimates the value of Zirfon at 150 million euros. ‘Agfa recently said that every gigawatt of additional hydrogen production yields 10 to 40 million extra turnover. We assume 20 million, with a market share of 50 percent in the long term.’

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He considers the whole of Agfa to be worth 5.30 euros per share. The analyst recommends building up the shares with a price target of 4.90 euros.

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Full screen display

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Aquivon

Solvay

has a similar product with Aquivon to Zirfon, but for pem fuel cells (polymer electrolyte membrane). ‘They are used for smaller-scale and more local production,’ says Sips. ‘Perfect for Western Europe. For the mastodon factories in countries with a lot of sun or wind, you need Agfa’s alkaline technology. But both are necessary. It’s not an either-or but a both-and story.’ The stock exchange recommends building Solvay shares with a price target of 120 euros.

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Umicore

builds EM catalysts for fuel cells. It concluded contracts with ten car and truck manufacturers and suppliers. ‘The company is a forerunner, but the turnover will remain small for the time being, at a few tens of millions of euros’, says analyst Wim Hoste. He gives a buy recommendation and price target of 54 euros to Umicore.

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Bekaert

offers materials for the sector. It formed a partnership with Coluyt, DEME and three other players consortium for hydrogen research. John Cockerill, the largest hydrogen player in our country as a specialist in electrolysis, will integrate this expertise in his production.

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Equipment

Internationally, many multinationals are investing in hydrogen. To build the factories you need equipment from, for example, Siemens, Plug Power or Thyssen Krupp. The latter wants to list its hydrogen branch Nucera. Production and distribution is done by giants such as Air Liquide, Shell or BP. The tank storage supplies names like Faurecia or Hexagon. The materials come from companies like AngloAmerican or 3M. Toyota, Hyundai or CNH build the cars and trucks that travel with the hydrogen.

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Although Sims doesn’t think we’ll be filling our tank with hydrogen in a few years. ‘That will take longer. It may be the turn of major consumers first, such as steel mills to replace coke. And then ships or large trucks. For private use, batteries will be more efficient than hydrogen for years to come.’

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